Bank repo is complicated and the reserve target at the IMF is moving away

He "repo" or bank loan against the guarantee of public securities is a victim of the bond collapse: its concretion was blocked when Argentine newspapers were again quoted below 30 percent.

Worryingly, there are also no signs that this trend driven by rising US rates, which has dragged down emerging markets, could be reversed in the near term.

The search for a "repo" by the Ministry of Economy was aimed at getting closer to the goal of accumulation of reserves agreed with the Monetary Fund in a contract signed a year ago.

In theory, BCRA should include about $2.8 billion of the $7.8 billion total between now and March 31 and thus be in compliance with the agency's provisions.

In theory, the Treasury would be the recipient of the "repo": therefore, the amount paid out by the banks could be accounted for as an increase in reserves. If the borrower had been the Central Bank, the IMF would not have counted them as reserves.

Likewise, BCRA did not have a sufficient amount of dollar ownership with international legislation to be used as collateral for the operation. The originally planned term of the operation, two years, was in line with the IMF's requirements because, if it was shorter than one year, even dollars could not be counted as reserves.

It is no coincidence that, considering this scenario that was initiated with the IMF, a mission led by Deputy Minister Gabriel Rubinstein traveled to Washington on Monday.

Although the Palacio de Hacienda made it known that the purpose of the trip was related to the revision of the goals of December 31, the harsh reality is that the obligations at the end of the first quarter of the year are at stake.

The "repo" came to reduce the missing US$2.8 billion to reach the target to about US$1.8 billion, which in turn could be reduced with the launch of the 3 soya dollar in March.

Among the justifications that the economic team will put on the table for the virtual mismatch from March 31 is the drought affecting all agricultural production.

In any case, this impact will be fully felt in the second quarter. The staff of the Monetary Fund was against the US$1,000 million debt-buying operation launched by Sergio Massa on January 18, and also against mechanisms such as the soy dollar, sectoral devaluation and for a limited time.

The purpose of including the reserve accumulation target in the agreement was to avoid delaying the official exchange rate and to force the government to reduce the exchange rate gap without mentioning the word "devaluation" in writing.

Will the IMF take a tougher stance on the Frente de Todos government in an election year? Very difficult.

The international organization has already taken a very "mild" attitude towards Argentina, considering the signed agreement with a very slow reduction of the fiscal red and allowing the existence of a wide exchange rate gap and control and intervention in the economy.

The opposition will surely resent the IMF for this position because it leaves the solution of all these imbalances in the economy to whoever takes office next December 10. Argentina is dragging the IMF in losing the credibility of its programs.

This foreign exchange drought, which affects the Government 10 months after the end of Alberto Fernández's mandate, highlights the existing restrictions on importers. Despite this, the Central Bank maintains the devaluation rate at around 6% per month, below inflation for each month.

Can the noise in the negotiations with the IMF reach the market? At the time the agreement was drafted, the possibility of breach was considered. That is why a margin of one quarter was placed between the IMF payments to the country and the date of payment of Argentina's debt to the agency. Delay in payments due to default does not immediately lead to default. Provide some oxygen.